In our opinion: Don't delay saving for retirement, even if you're young

People in the stages of early adulthood don’t generally spend much time thinking about themselves in the stages of late adulthood, which is regrettable, because it’s costing them lots of money.

A recent survey by national financial planning organizations shows young adults typically are not saving adequately, if at all, for their retirement years, and it’s costing them millions in future dollars. Should the trend continue, it will make it much more difficult for the nation to get control over entitlement programs that are already under pressure.

Truth be told, today’s young adults have not had terrific role models in their generational predecessors. A large number of Baby Boomers, according to surveys and data, are under-prepared for the day they would leave the workforce, which for most would be either in the recent past, or very soon. Many will struggle with their finances and their plight will make it politically infeasible for policy makers to take the necessary steps to reign in national spending on Social Security and other programs.

Fast forward 40 years and the picture looks even bleaker, given a current snapshot of the so-called Millennial generation – those born at the turn of the millennium who now are in their post-education and early employment years. The recent research suggests that less than 1 in 4 young adults are saving anything for the future.

Many of them have good reasons – or at least, strong rationalizations. They feel they don’t earn enough to save; they intend to start saving some day, but find it hard at the present time. The experience of the Baby Boomers proves that for a lot of people, “some day” may never come, or may come too late to make a difference.

The price of procrastination is large. Sixty-two percent of adults ages 45-60 say they will have to delay retirement and continue working beyond the day they thought they would be done – certainly beyond the traditional retirement age of 65. Surveys reveal that many in that category regret not having begun a savings plan earlier in life. For the younger generation, there’s an object lesson here. Studies show that people who simply begin any kind of plan at the start of a career end up with more than three times more money than those who sit back and let nature take its course.

The best starting point, the experts say, is to take advantage of any 401-K plans offered by employers, many of whom include matching contributions. Studies show that among 20-somethings, participation rates in such plans are low. For those young adults, that is essentially turning away free money.

Overcoming the current apathy will require a change in societal attitudes, and education is the key. Personal finance curricula should be emphasized more in secondary schools. Parents should reinforce the importance of financial planning, and kids should be given the tools to make informed decisions about investing. Regardless of the caprice of the equities markets, people should be keen to the surprising power of simple compound interest.

If the trend is to be reversed, the time is now, as the babies of Baby Boomers are reaching the age where planning for their future can’t be considered optional.